2011 Awards for Excellence

Citation

(2012), "2011 Awards for Excellence", Review of Accounting and Finance, Vol. 11 No. 1. https://doi.org/10.1108/raf.2012.28511aaa.002

2011 Awards for Excellence

Article Type: 2011 Awards for Excellence From: Review of Accounting and Finance, Volume 11, Issue 1

The following article was selected for this year’s Outstanding Paper Award for Review of Accounting and Finance

“Does the disclosure of corporate governance structures affect firms earnings quality?”

Jui-Chin ChangDepartment of Accounting, School of Business, Howard University, NW Washington, District of Columbia, USA

Huey-Lian SunDepartment of Accounting Finance, School of Business Management, Morgan State University, Baltimore, Maryland, USA

Purpose - The Sarbanes-Oxley Act (SOX) mandated a variety of corporate governance mechanisms to improve the transparency of financial reporting quality. This paper’s aim is to investigate whether SOX’s recently mandated disclosure of corporate governance structures affects the market’s perception of earnings informativeness and firms’ earnings management.

Design/methodology/approach - Since the first compliant disclosure of the Act would be found in firms’ 2002-2003 financial reports, the authors retrieve the post-SOX data (pre-SOX data) from the 2002 to 2003 (2001-2002) period. Further, the study adopts Anderson et al.’s model to test the relations between earnings informativeness, audit committee independence, and other corporate governance variables. A similar mode is used by Chang and Sun in their study of cross-listed foreign firms. To measure the discretionary accruals, the authors adopt Kothari et al.’s model and use the two-digit SIC code in the cross-sectional regression.

Findings - It is found that the market valuation of earnings surprises is significantly higher for firms which disclose stronger corporate governance functions. It is also found that the effectiveness of corporate governance in monitoring earnings management is improved after the mandated disclosure.

Originality/value - The empirical evidence shows that the quality of accounting earnings is increased after the SOX’s mandated disclosure, which strengthens the link between financial reporting and corporate governance functions.

Keywords: Corporate governance, Earnings, Financial reporting

www.emeraldinsight.com/10.1108/14757701011068048

This article originally appeared in Volume 9 Number 3, 2010, pp. 212-43, Review of Accounting and Finance

The following articles were selected for this year’s Highly Commended Award

“The market mispricing of special items and accruals: one anomaly or two?”

T.J. Atwood and Hong Xie

This article originally appeared in Vol. 9 No. 2, 2010, Review of Accounting and Finance

“Audit tenure and earnings surprise management”

Li-Chin Jennifer Ho, Chao-Shin Liu and Thomas Schaefer

This article originally appeared in Vol. 9 No. 2, 2010, Review of Accounting and Finance

“The wealth effects of investing in information technology: the case of Sarbanes-Oxley section 404 compliance”

Surendranath R. Jory, Jacob Peng and Caroline O. Ford

This article originally appeared in Vol. 9 No. 3, 2010, Review of Accounting and Finance

Outstanding Reviewer

Pervaiz AlamKent State University, USA